This week we look at a case involving two doctors who receive funds from the local school to use for the education of their autistic child. The doctors attempted to claim they were running a business and attempted to deduct the net losses they incurred. The Tax Court analyzed this case under Section 183.

We also go on beyond this case (whose result probably isn't surprising to most listeners) to discuss the general "hobby loss" rules under Section 183. The materials can be downloaded here.

I will be in Tulsa, Oklahoma this week speaking on technology and the tax practice, so hopefully we'll get the podcast up timely this week, but it may be delayed.

We look at a recent private letter ruling where the IRS made it clear that taxpayers who use the 60 day rollover rule to "borrow" from their IRA do so at their own risk, even if events completely out of their control intervene to make it impossible to complete the rollover.

This podcast discusses the law surrounding the 60 day rollover, and the details of this particular ruling. Be sure to download the materials before listening to the podcast.

I am posting this from The Founders Inn in Virginia Beach, Virginia, where the second run of the Virginia Accounting & Auditing Conference is talking place. I'll next be speaking (again on technology matters) at the Oklahoma Tax Institute on December 2. Information on that conference can be found at this website.

This week's podcast is based on my presentation today at the Arizona Society of CPAs' Arizona Federal Tax Insitute held at the Arizona Biltmore. The Biltmore is located just south and slightly west of Piestewa Peak and not terribly far from my office in Phoenix (less than a ten minute drive--and that only because my office is closest to the back side of the resort, so you have to drive around it first).

There are a number of pieces of material for this podcast available. You probably will want each of the following:

1. The Manual

2. Excel Example File

3. The Slides

In the upcoming week I will be in Virginia Beach, Virginia for the Virginia Accounting and Auditing Conference's second run. It will be the same presentation I gave in Roanoke back in September.

I have two more "on the road" presentations scheduled--the first in Tulsa, Oklahoma for the Oklahoma Tax Institute where I'll do a technology update for tax professionals on December 2. The next (and most likely final) road trip this year will be at the Ohio Society of CPA's Ohio Federal and State Tax Insitute to be held in Columbus on December 15 and 16th. I'll be doing the Federal Tax Update the morning of the 15th.

If any of you are going to be attending those conferences, let me know or stop by and say hi at the conference.

This podcast deals with three cases that dealt with attempts to have the court deal with the substance of a transaction as opposed to its form. We'll discuss why the IRS can succeed at this, while taxpayers have an uphill fight in most cases.

This week's developments in the area of extensions for 2006 and the IRS's losing battle on the excise tax on flat rate per minute long distance and the excise tax on toll calls are also discussed.

The materials can be downloaded here.

This week we look at two recent Tax Court cases that dealt with contributions to charity and the values of the items donated. In one case, the item donated was a car while in the other case it was a monastery.

In both cases, actual sales of the property in question made the courts seriously question the taxpayer's appraisal--and eventually made the court decide against the taxpayer.

Materials for this podcast are available from this link. Please download those to use while listening to the podcast itself.

This week we discuss the issues surrounding the use of the mail and electronic filing to prove a filing date. The materials can be downloaded from this link and can be referred to while listening to the podcast.

There are a number of myths and misunderstandings among practitioners in this area, so we review the authority in this area. We also talk about the split among the Circuits on whether Section 7502(c) provides the exclusive method to have a presumption of timely filing if the IRS can't find the return, as well as the IRS's idea on how to solve this split. Not surprisingly, it's not by going along with those Circuits where the IRS lost.

Today Anthony Forschino, Legilsative Liaison for the Arizona Department of Revenue spoke at the Arizona Society of CPAs Arizona DOR Liaison Luncheon about legislation passed the last legislative session, and those bills the Department of Revenue plans to ask to be considered in the upcoming session.

Anthony also noted the "old" email addresses no longer work for the Department of Revenue, so you need to update your address book for any contacts you may have to their new azdor.gov address.

This podcast is based on the September 20 presentation I gave for the Arizona Society of CPAs on the changes to Circular 230 that became effective over the summer.

The manual that was distributed at the lunch session is available for download here.

Again, please post your commments on the blogsite here at http://ezollars.libsyn.com.

This week we look at two Tax Court opinions released on the same day that both dealt with whether a transaction represented a loan to the taxpayer or was income. The cases are Teymourian v. Commissioner (TC Memo 2005-232) and Karns Prime and Fancy Food, Ltd. (TC Memo 2005-233).

The results may initially appear to be at odds with most tax professional's expectation based on the fact that in the case where the taxpayer prevailed, the loan in question was with his closely held corporation and poorly documented, while in the case where the IRS prevailed the purported loan was from an unrelated third party and clearly documented as a loan.

I also briefly discuss the IRS's release of new proposed regulations to explain Section 409A that Congress put into the law last October. If your client either participates in a nonqualified plan or sponsors one, you should review these new proposed regulations, which modify the original guidance the IRS provided in Notice 2005-1.

Please post comments here on ezollars.libsyn.com by clicking on the comment line just below the description.

Comments sparked by an online discussion on Yahoo Groups Taxprofessionals group with Drew Edmundson.

I wanted to clarify that I didn't mean to be completely negative about Microsoft or the responsibilities those of us who are users have to bear for the security issues we face (especially the outbreak of ZOTOB).

I do expect Vista to become the next dominant operating system and I am cautiously optimistic that Microsoft will choose to force users and developers to pay attention to security. But we still have to be aware of the temptations that exist for Microsoft to back off of this or for users to rebel when they think Vista has "broken" their applications.

This is a recording of a presentation made on the morning of September 27 at the Virginia Accounting & Auditing Conference on the Accounting Office of the Future (or at least that's the title) from the Hotel Roanoke in Roanoke, Virginia. This presentation deals with the release of Windows Vista Beta 1 and the potential impact of that on accounting firm practitioners.

The slides from the conference can be downloaded here.

The Hotel Roanoke is known for a somewhat unusual dish served in its restaurant--peanut soup. Think of it as thin peanut butter and you've got it. It's actually quite good, though most people's initial reaction to the idea is that they want to look at something else on the menu.

I'll be doing a similar session at the Virginia Accounting & Auditing Conference held later this year in Virginia Beach, Virginia. If you are in the area, you should check with the Virginia Society of CPAs and can sign up at this link.

This file contains a correction/clarification to yesterday's KETRA update. As is pointed out in this program, Section 303 of the Act does limit these higher rates to provision of Katrina relief. As well, there is a short period where the rate is lower than the rate noted--the new business rate took effect on September 1, but the 70% rule goes into effect on August 25, 2005

Thanks to Michael Wing, CPA on Yahoo Groups' Taxprofessionals group for pointing out these issues.

This quick update summarizes the items contained in the Katrina Emergency Tax Relief Act of 2005 (KETRA), concentrating on those items that have impact across the country, as well as summarizing provisions that are targeted directly at the Katrina disaster area.

I recorded this file this morning using the Samsung portable player, so audio quality is a bit lower than normal. I'm getting ready to fly back to Phoenix later today and am uploading this before I leave.

An outline can be downloaded via this link. If you are reading this in iTunes, come to the main website (noted below) to see that link and get the outline.

Please post any comments you may have at the home page for the podcast at http://ezollars.libsyn.com.

This week's podcast deals with arbitration awards and IRA accounts. What happens when a taxpayer is awarded an amount in arbitration regarding the management of an IRA account, but the award is paid to the taxpayer? Can these funds be put back into the IRA? This week we look at three IRS private letter rulings on the subject to show both what has worked and what has not, at least in the IRS's view.

We also look at the case of a taxpayer who tries to invoke the Cohan case, only to have the Tax Court explain the limits of the use of that case. As well, the court points out that merely because the IRS settled a similar case in a certain manner doesn't entitle the taxpayer to the same settlement. The case is Stewart v. Commissioner, TC Memo 2005-212.

Be sure to download the related materials for this podcast from this link.

No, we're not talking about reconsidering your vote from last November. Rather, this week's podcast deals with both the automatic and discretionary extensions the IRS grants to make elections for which a due date is specified. This topic was brought up a while back on the California Society's TaxTalk list and it was mentioned that these were important regulations to keep in the back of your mind.

Please download the materials before listening to the podcast. Note that this week's podcast is a bit longer than normal.

I recorded this podcast last week while down in Tucson at the University Marriott next to the University of Arizona. My wife was down there attending a conference at the Tucson Convention Center, so I had time available while she was away at conference.

If you read this before Tuesday and will be in Phoenix, you can still sign up for the Circular 230 Update I will be giving at the Hilton Garden Inn at Central & Thomas in Phoenix. Along with the talk, you get lunch and CPE, though of course for a fee.

Today's podcast reports on the Arizona Society of CPAs' Arizona Department of Revenue Liaison luncheon today. Speaking at the lunch was Christie Comanita, Manager in the Tax Policy & Research at the ADOR who oversees rulings on taxes other than income taxes at the Department of Revenue. She discussed the system for obtaining and issuing various rulings, as well as an update on the Streamlined Sales Tax Project and Arizona's position on that program.

The program also details Arizona Individual Income Tax Ruling ITR 05-2 on claiming the exemption for your child if you did not claim the child on the federal return so the child could claim one of the education credits.

This week’s podcast deals with two recent cases, one a win for taxpayers and one a loss. You can download the material (which consists of the two cases) from this link.

In the first case, Davis v. Commissioner, TC Memo 2005-202, a taxpayer had to foot the bill for over nearly $7,900 in fees to contest an IRS assessment because of a mix-up over his address that caused notices of the pending exam, as well as the notices prior to assessment when the case could have gone to appeals, to be sent to the address the taxpayer shared with his ex-spouse. The Tax Court held that while the IRS apparently misdirected one notice that should have gone to a different address per its own files, later notices that would have enabled the taxpayer to contest matters earlier went to the wrong address because the taxpayer continued to list his old address on the 1040s he filed.

In the second case, Allemeier v. Commissioner, TC Memo 2005-207, a taxpayer proves that what many tax preparers “know” is not necessarily the case—that obtaining an advanced degree will automatically cause education expenses to fail the test on whether the taxpayer has qualified for a new position and thus lose the deduction. Mr. Allemeier succeeded, representing himself, in having the court allow him to claim the costs of his MBA educational program over the objections of the IRS.

I’m uploading this show before I head to Tucson for a day, so it’s going up a little early this week. I’ll likely be taping the podcast for next week while in Tucson (I usually try and get them ready in advance so there’s less pressure to meet a schedule.

This week we look at a recent decision (Brooks v. Commissioner, TC Memo 2005-204) involving the impact of repaying S corporation debt during the year when, at the beginning of the year, the shareholder’s basis was less than the face amount of the note. In the case in question, the shareholders repaid such a debt in its entirety at the beginning of the year, the corporation sustained a loss during the year, and then the taxpayer loan back enough money to both return the entire repayment and then advance enough additional to give basis to take the loss. The court analyzed this case and how it differed from the case of Corneilus v. Commissioner, 58 TC 417, affd CA-5, 74-1 USTC ¶9446, 494 F2d 465, 33 AFTR 2d ¶74-1331).

As we normally do, the podcast materials can be downloaded here on the ezollars.libsyn.com website—to get them click this link (if you are reading notes attached to the podcast in iTunes you’ll need to actually go to the site first to do that clicking).

The Phoenix Tax Workshop will start its new year’s programs this month. I won’t be able to attend the first meeting (I’m going to be speaking at the Virginia Accounting & Auditing Conference in Roanoke, Virginia sponsored by the Virginia Society of CPAs and Virginia Tech University at that time), but I would suggest those in Phoenix consider signing up for the program.

Of course, if you're close to Roanoke go ahead and sign up for that conference. My topic is on technology in the local accounting practice, but there are lots of other issues covered in those two days. The conference will be repeated in November in Virginia Beach, and I'll be there as well, so that's another option for anyone in Virginia or nearby.

As well, continuing from the midweek podcast earlier this week, remember to consider the needs of the agencies serving those affected by Hurricane Katrina. The Red Cross, along with Yahoo, have established a website that makes it very easy to donate a standard amount to hurricane relief using your credit card. Please take the time to make a donation to help the relief effort, either via that site or through another relief agency.

Remember that, unfortunately, these types of tragedies spawn their own scams—so be sure to check out any charity you aren’t familiar with before parting with your check. The crooks are going to be calling, sending out emails and and setting up their own websites. On the latter issue—the safest way to be sure you are at the website for the real charity is to be sure and type the address into your browser’s address bar or click only on links where you trust that those responsible for the website are both trying to send you to the proper site and have done their homework to assure that they have linked to the real charity. I expect “phishing” emails to start to hit mailboxes soon taking advantage of this situation.

On an administrative aside: the text below allows me to “claim” this podcast on Odeo (an online podcast listening service).

My Odeo Channel (odeo/4410b05381cc2d63)

Given the disaster that has taken place on the Gulf Coast with Hurricane Katrina and its aftermath, I’ve put together a quick and dirty summary of some of the tax issues involved in casualty losses and federally declared disaster areas that may be of use for those of us who have clients that are located in the affected areas. Note that since this was put together rather quickly, you should confirm all of these details. I also added brief consideration of the issues to be considered with off-site backups due to the risk of a common disaster hitting both the original files and the backup—a situation that, unfortunately, has likely happened to some businesses in New Orleans.

A list of the federally declared disaster areas can be found at the FEMA website, so that you can determine the counties in Louisiana, Mississippi and Alabama that are subject to these rules.

In related matters, the AICPA has posted a set of resources for CPAs related to disaster recovery, as well as a link to the document Disaster Recovery: A Guide to Financial Issues that was written jointly by the National Endowment for Financial Education, the American Red Cross, and the AICPA, . As well, the AICPA has posted a page linking to various organizations to which contributions can be made to support relief efforts.

Weekly podcast 12 dealing with children of divorced parents. A recent Tax Court Summary Opinion (Oman v. Commissioner, TC Summary Opinion 2005-110) potentially sheds some new light on the rule under the law in effect prior to 2005 about the dependency exemption for the noncustodial parent. The matter at hand is what happens if the divorce decree clearly provides that the noncustodial spouse should be given the exemption, but a proper Form 8332 isn�t filed with the return. The answer in this case may surprise some practitioners who have followed other cases through the Tax Court.

As well, the podcast discusses the importance of the changes made to Section 152 by last year�s tax law changes.

There are written materials you should download by clicking this link to look over while listening to the podcast.

Weekly podcast 11, dealing with the solar energy provisions of the Energy Tax Incentives Act of 2005 and the related credits available under Arizona income tax law.

The Podcast Materials for this podcast are available for download at http://ezollars.libsyn.com.

The Phoenix Tax Workshop is also now accepting memberships for next year’s programs. The cost for a one year membership is $260 for the first member of a firm, with discounts available for additional members from the same firm that are described on the websites. The dates of programs for the 2005-2006 are also now on the calendar on the organization’s website.

Arizona Tax Update podcast report on the Arizona Society of CPAs Arizona Tax Liaison Committee luncheon today at the Phoenix Doubletree Guest Suites at the Gateway Center (44^th Street & Van Buren).

Today’s presentation primarily dealt with legislative changes outside of the income tax, and the Arizona Department of Revenue’s current audit program related to purchases of furniture from a single out of state vendor in North Carolina.

Podcast 10, produced and uploaded on a MacIntosh mini just for something different to do. This is the first of what I hope will be a set of three podcasts dealing with the Energy Bill that President Bush signed into law on Monday.

Download the materials for this presentation from the http://ezollars.libsyn.com website, or simply go to http://www.edzollarstaxupdate.com.

Also discussed briefly on this podcast is some informaton on how I recorded it using Audacity on the MacIntosh (or the virtually identical Windows version). I also mention an interesting Internet streaming radio station, www.radiofreephoenix.com. If you grew up in Phoenix in the 1960s and 1970s and remember listening to KCAC, the original KDKB, Mike Condello and know who Comptom Terrace was named in memory of, it's an interesting listen. Maybe even if you don't know what any of that refers to as well...

A general update on tax developments this week, including a summary on two new tax bills, two revenue rulings that were published, and a discussion of the IRS announcement of National Research Project exams for S corporations for 2003 and 2004.

The materials should be downloaded from the ezollars.libsyn.com website to follow along with on the FICA presentation.

Postcast 8 on uninsured medical reimbursement plans--a structure that's not for everyone, but which is a perfect fit in the right situation.

Download the materials via the ezollars.libsyn.com website before listening to this broadcast.

TaxUpdate goes Live! Podcast 007 dealing with reportable transactions and the penalty for failure to disclose added by last year's law.

Download materials that consist of the Powerpoint for this presentation, recorded live at the Arizona Forum for Improvement of Taxation summer conference at the Arizona State University downtown Phoenix facility.

I'm looking for comments on the recording, which was captured using a Samsung YT-MT6 voice recorder (and MP3 player). One problem with a live presentation is that questions from the audience aren't very audible, but hopefully you'll figure out the questions from the answers.

I hope to be able to do some more live work from presentations I give, so I'm working on dealing with this. But it is a first try right now.

Weekly show 6 dealing with employee business expenses and reimbursable plans per IRC Section 62(c). You should download the "handout" in addition to listening to the podcast itself. The presentation deals with the requirements that must be met for reimbursement of an employee's expenses to be excluded from the employee's income. This version of the file is the same as the prior one, except the audio has been amplified.

Weekly show 6 dealing with employee business expenses and reimbursable plans per IRC §62(c). You should download the "handout" in addition to listening to the podcast itself. The presentation deals with the requirements that must be met for reimbursement of an employee's expenses to be excluded from the employee's income.

Show 5.5 (not a weekly show--kind of a "special report").

This show presents a "first day" view of the Strangi decision issued today by the Fifth Circuit Court of Appeals. The Fifth Circuit upheld the Tax Court's decision in TC Memo 2003-145, but did so without ruling on the merits of the §2036(a)(2) analysis that many practitioners viewed as the major concern in that case.

From a CPA's perspective, this discussion looks at the risks involved from the fact that it's become clear that §2036(a)(1) attacks on operational problems with the FLP will render the FLP ineffective as a transfer vehicle. Accountants' journal entries are a recurring theme in the cases that lose in court on §2036(a)(1), and this fact should not be lost on CPAs who will be doing 1065s and other accounting for such partnerships.

As well, I do a quick discussion of what types of clients likely should not be advised to make use of a family limited partnership given the §2036(a)(1) problems.

Show number 5. The self-employed health insurance deduction under IRC Section 162(l) is covered by this podcast. The information for the podcast is found at http://www.edzollars.com/SelfEmployedHealthInsurance.pdf. The program also covers the recently issued IRS Chief Counsel Memorandum 200524001. Please post your comments here.

This week's "regular" podcast (assuming two weeks make this regular) deals with how three states determine if a trust or estate is a resident or nonresident entity, as well as containing a discussion of how to approach state filing issues in general with trusts and estates. The states we look at will be Arizona, California and Michigan. The materials you can refer to are located here: State Resident Fiduciary Returns" There are links to the California forms and instructions on my personal website at http://www.edzollars.com. I appreciate comments about this webcast--just send them to ed@hmtzcpas.com.

Updated discussion of self-employment matters to cover matters raised by posters to Yahoo Groups' taxupdate discussion group. The IRS poster referenced is at: http://www.irs.gov/pub/irs-pdf/p3204.pdf

The status of self-employment tax and limited liability companies. This a portion of a presented made at the Phoenix Tax Workshop. The materials for the full presentation, which also covers S are available.

A summary of the tax laws passed and signed into law in the most recent Arizona legislature session, based on a summary presented to the Phoenix Tax Workshop. You should download the materials in order to get the full benefit of this presentation.